Developer inks deal with Costco for CityGate project

Anthony J. Costello & Son Development LLC is moving forward with its CityGate project, a $250 million mixed-used development on 45 acres in the city.

The real estate developer Wednesday said Costco Wholesale Corp. has approved the site for its first membership warehouse club in Western New York.

Costco is proposing to build a 150,000-square-foot warehouse club that would anchor CityGate, which is located at Westfall and East Henrietta roads at the site of the former Monroe County Iola Campus. Costco plans to invest some $30 million and add up to 300 full-time jobs.

Additional plans for CityGate include a hotel, 300 two- and three-bedroom residential units overlooking the Erie Canal, and additional retail and commercial space. There will be eight stand-alone buildings on the site, which will have around-the-clock security.

Costello is partnering with Morgan Management LLC on the residential portion of CityGate.

Plans also call for a satellite transit center, including a 90,000-square-foot parking garage. Working with the Rochester Genesee Regional Transportation Authority, Costello has secured $6 million in state funding for the transit center.

CityGate will complement the nearby Reserve on the Erie Canal, a $180 million residential community his company is building on the east side of South Clinton Avenue in Brighton, he added.

Terms of the deal with Costco to occupy more than 15 acres at CityGate are under negotiation and the Rochester City Council needs to approve changes to the overall plan.

Developers are expecting to begin demolition the existing buildings at the site within 60 days and start construction of the Costco store shortly after that to meet the retailer’s plans to have it open by next spring.

Costco generates nearly $100 billion in annual revenues and is the largest warehouse retailer in the United States, with more than 400 warehouse clubs across the country, as well as international locations. In addition to groceries and gasoline, Costco sells appliances, electronics, office products, pet supplies and jewelry.